The austerity policies of the past two years is threatening a double-dip recession.

It's time for some of those among us to come to two uncomfortable truths on this forum.

1. The Obama administration has overseen the sharpest decline in deficit spending just about every single one of us have seen in our lives, thanks in part to austerity demanded by Tea Party Republicans.

2. This radical reduction in the deficit is risking to stop our recovery growth dead in its tracks.

I've made this point over and over and over and over on this forum: deficit reduction retards growth.

So when you slash into the deficit as severely as we have, you will slow growth with the same severity. And what do you know? We ended up with negative growth in 2012's fourth quarter. Two quarters in a row, of course, is the legal definition of a recession (assuming the original assessment of 2012's 4th quarter holds where it is).

We've learned nothing from Europe, which has seen huge unemployment numbers, languishing recoveries, and double- and triple-dip recessions because they embraced austerity during a financial crisis while we embraced (albeit limited) stimulus.

In comes the Tea Party, and by the conclusion of the past Congressional cycle of radical austerity policy, we're now on the verge of a double-dip recession.

This is not random, folks. This is happening for that specific reason.

Here's a pretty important fact that virtually everyone in Washington seems oblivious to: The federal deficit has never fallen as fast as it's falling now without a coincident recession.

To be specific, CBO expects the deficit to shrink from 8.7% of GDP in fiscal 2011 to 5.3% in fiscal 2013 if the sequester takes effect and to 5.5% if it doesn't. Either way, the two-year deficit reduction — equal to 3.4% of the economy if automatic budget cuts are triggered and 3.2% if not — would stand far above any other fiscal tightening since World War II.

Until the aftermath of the Great Recession, there were only three such periods in which the deficit shrank by a cumulative 2% of GDP or more. The 1960-61 and 1969-70 episodes both helped bring about a recession.

Far steeper deficit cuts during the demobilization from World War II and in 1937-38 both precipitated economic reversals.

Now the deficit is shrinking about 50% faster than it did during the booming late 1990s, when the jobless rate was falling south of 5% and tax revenues were soaring — without tax hikes.

That's not to say that a recession is in the cards now, as the Federal Reserve applies its might to keep housing on a recovery path and helps propel the stock market higher. But growth is likely to be disappointingly weak yet again.

The Congressional Budget Office projects just 100,000 jobs will be added per month this year, the jobless rate will remain stuck around 8% and the economy will grow 1.4% if the sequester takes effect, but that may be too optimistic.

There was certainly no good economic reason for policymakers to risk the hit to growth that came with the roughly $200 billion fiscal cliff tax hike. Now they risk compounding the fiscal drag with poorly targeted budget cuts.

History suggests that there's little good to be gotten from cutting the deficit much faster than 1% of GDP per year. That's especially true at the moment, given the nature of our related demographic and budget challenges.

Both of those challenges suggest that growth should be our paramount concern, far ahead of near-term deficit reduction, even as we work to improve the intermediate-term budget outlook.

As far as the budget goes, it makes no sense that Congress remains focused on cutting discretionary spending. The danger clearly comes from entitlement programs, particularly health care, and the prospect that interest on the debt will spiral if we don't better align spending promises with revenues. These are programs that need to be reformed gradually and with great care, but there's no good reason to delay.

As for demographics, this was supposed to be the decade in which the leading edge of the Baby Boom generation began to ease out of the workforce and pass the baton to the next generations. Instead, there are not enough jobs to go around to allow for a seamless transition and Baby Boomers are hanging on longer as they try to recover from the financial damage inflicted by the housing bust.

There has been plenty of economic pain to go around, but younger workers have borne the brunt of three crises — jobs, housing and student loans. Since January 2000, the number of full-time jobs is up 10.5 million among workers 55 and up but down close to 8 million among the under-55 population.

In the speeches of Washington politicians, deficit reduction is all about being fair to the young and not leaving the next generation with ungainly debts. That might be true if deficit reduction came through smart changes to entitlement programs, but that's not the case.

In effect, the overly rapid fiscal retrenchment is giving younger workers a deal that none of them should want: We'll slash the deficit now, so that you will have a harder time getting good jobs and paying back your personal debts. We'll cut critical government spending on education, infrastructure and science so that new college graduates for whom job prospects remain discouraging can put their futures on hold for a little longer.

That's the whole point of this thread. It's pretty clear you didn't bother reading the OP.

In order for Obama to reduce the debt on his watch, he would have to eliminate the $1.3 annual deficit he inherited over the course of his Presidency.

In the wake of a recession, that's asking for a Second Great Depression.

That means Obama would have had to have signed into law at least a $13 trillion deficit reduciton plan for the next ten years.

That... is insanity. And another Great Depression in the making.

The GOP and Obama were working on a $3 trillion deficit reduction package in 2011.

You are advocating over four times that.

Do you understand what that would do to the economy?

Quote:

Originally Posted by your OP

The danger clearly comes from entitlement programs, particularly health care, and the prospect that interest on the debt will spiral if we don't better align spending promises with revenues. These are programs that need to be reformed gradually and with great care, but there's no good reason to delay.

Obama has not negotiated iin good faith, he's gotten most of what he wants, and we're still heading for the cliff.

uh facts are getting in the way of your argument points. It was the Republicans that never negotiated in good faith. The re-election of Obama means to me that Obama wasn't the obstructionist. Or why did they re-elect him?

The historical obstructionism of the opposing party was unprecedented.

More filibusters than ever was even dreamed of by the opposing party. Obama had to have 60 votes to pass anything.

It started from day one. The Senate majority leader publicly declared that the #1 goal was to make Obama a one term president.

On inauguration night top Republicans got together in a steakhouse and conspired to obstruct every single issue or proposal that Obama wanted. And then over the 4 years they carried out that plan.

He proposed legislation in the exact same form as previous Republican legislators had proposed. Same exact proposal as the Republican. But now they not only opposed their own ideas and proposals but filibuster the proposal.

uh facts are getting in the way of your argument points. It was the Republicans that never negotiated in good faith. This election decided that Obama wasn't the obstructionist.

The historical obstructionism of the opposing party was unprecedented.

More filibusters than ever was even dreamed of by the opposing party. Obama had to have 60 votes to pass anything.

It started from day one. The Senate majority leader publicly declared that the #1 goal was to make Obama a one term president.

On inauguration night top Republicans got together in a steakhouse and conspired to obstruct every single issue or proposal that Obama wanted. And then over the 4 years they carried out that plan.

He proposed legislation in the exact same form as previous Republican legislators had proposed. Same exact proposal as the Republican. But now they not only opposed their own ideas and proposals but filibuster the proposal.

This is absolutely unconnected to reality. He's cut the deficit at speeds unseen in our lifetimes.

No he hasn't. that is a lie. I'm not sure if you are so stupid that you honestly believe this garbage or if you are just a dishonest piece of shit.

Obama inherited either a $460 billion deficit or a $1.1 trillion .. depending on how much you want to stretch the truth. No way you can claim he "inherited" $1.4 trillion.

Here are the FACTS...

The deficit is fluid and goes up and down over the course of the year. The 2008 deficit was $460 billion. The deficit at the MOMENT Obama took office was projected as $1.1 trillion. He then proceeded to add over $300 billion to that amount. He then reduced that by $100-$200 billion each year.

Claiming that Obama is some great deficit reducer is a blatant lie. Period.

The DEFICIT is not the debt... it can be eliminated INSTANTLY. You don't have to "work down" the deficit.

You can of course excuse some of the deficit by the fact that the economy sucks and therefore tax revenue will down... but don't try to pass off Obama's "deficit reduction" as anything close to being true.

No he hasn't. that is a lie. I'm not sure if you are so stupid that you honestly believe this garbage or if you are just a dishonest piece of shit.

Obama inherited either a $460 billion deficit or a $1.1 trillion .. depending on how much you want to stretch the truth. No way you can claim he "inherited" $1.4 trillion.

Here are the FACTS...

The deficit is fluid and goes up and down over the course of the year. The 2008 deficit was $460 billion. The deficit at the MOMENT Obama took office was projected as $1.1 trillion. He then proceeded to add over $300 billion to that amount. He then reduced that by $100-$200 billion each year.

Claiming that Obama is some great deficit reducer is a blatant lie. Period.

The DEFICIT is not the debt... it can be eliminated INSTANTLY. You don't have to "work down" the deficit.

You can of course excuse some of the deficit by the fact that the economy sucks and therefore tax revenue will down... but don't try to pass off Obama's "deficit reduction" as anything close to being true.

Tax cuts Obama for the most part put permanently into place. Must have been a good idea.

Tax cuts for the middle class are always a good idea.

We have built the largest middle class the world has ever known. Its our core strength and the reason we continue to be a world economic and military power. We cease to have a strong middle class, we are done as a nation.

And the stimulus was 1/2 tax cuts as per Republican request. He caved.

Make sure you point out that half of the tax cuts were targeted towards poor and middle income folks. Of the $400, $64 went to "Making Work Pay" credits for working poor, $72 to raise the AMT level for middle and upper middle income families (many in big cities where AMT is injurious), $14 to the house purchase program, $3 to cash-for-clunkers, etc.